Big Banks Want to Look More Traditional

11/10/2011 4:01PM

WSJ's Liz Rappaport visits Mean Street to look at Goldman Sachs and Morgan Stanley considering the idea of reducing mark-to-market accounting practices in order to shift their profile to more of a traditional bank. Photo: AP Photo/Mark Lennihan

This transcript has been automatically generated and may not be 100% accurate.

I ... when Rappaport ... it is coming on to talk about accounting ... don't ... don't ... on the soft ... is is actually don't think that melts ... Mrs ... this is actually an interesting topic ... banks have and I were turned into the yard on August or you you you should get you do ... sewing to me ... the meat running game give my quick take on and you tell me if I'm right ... the investment banks and brokerages to mark to market pecan crust means that the end of every day ... can you say all I lost money here and made money here ... and what a PNL profit loss that looks like bread like you're like your brokerage account and every week and the Chavez added that ... that's not what regular way thanks to ... the Arab League commercial banks like Citigroup JPMorgan and you know you do historical accounting which means you go alike have alone at some level to this value and that's with the Southeast Asian market to market all the time ... now apparently ... Goldman Sachs Morgan Stanley are considering doing what the big banks already do which is ... known to this historical counting thing gap for certain types of bonds ... and they're ... really trying to Holi here ... golden sands warns them to try and hide anything bother hiding anything but they were it would mean that they don't take ... the losses on the market value of the uncertainties Investment Grade Corporate wanted to give out for a commitment that they make it to borrow to make win-win and I met at Umina bunnies actually I'm not actually are and that's with your entry to know if I win why we take you are and why we take a loss of a well we have right may ... be that way we haven't even really needed to cut paper a lot about ... a piece of paper ... which they feel is unnecessary especially have to ... put them in a competitive disadvantage any now that it's just ... Goldman kind of ... basically out there see only more traditional ... seeming investment bank eluting Morgan is Khona like now we're gonna make the bank ... he does so Goldman's ill databases saying why should we be the only one that that that may take place on ... these Goldman going to be more like a bank going toward me ... James Gorman Morgan Stanley's basically said you know lot ... I kind of low whether we like and how we can have are like a bank with building ... part of a book of business ... not to be like a big commercial lender but ... time is right our business to be more of that scene is a traditional bank ... tradition Financial station and say ... well we're still sticking to the rear where monkey traders ... thing on ... they are sticking to their were still a bunch of traders thing I really think I you know that this is just a business cycle and ... everything will come back in Onek as their images roar Ahead Mike have before trading in ... Purina making tons of money ... but I think that ... there are factions in an appealing this decision isn't necessarily the decision made I should make that clear what the ALT's landing counting decision so there's to be inside the firm which I think is interesting because I think ... there are some factions building whipping Goldman that wanna do things slightly differently because the world this change right ... can you put that this question about how to handle the accounting ... right let's pretend in a world where gold is back to making ... one of ... twelve billion dollars the year our much of it and I ... this is all accounting is to be a non-issue right I mean it's only the the only reason why we've discussed now we're seeing it ... is because profits are much more to come by Wall Street and Route and saunas much greater sensitivity over the accounting for you the profits from was definitely their tweaking things to further squeeze as much as they can out of business they're doing which is so much left ... in the studio ... was again I think the accounting is kind of one way they can try to ... squeeze out some ... some profits are high that pushes the end of the day ... you know in this is something that people don't ... you know it is critically truly come to the banking sector which is ... you really have to look good cash flow what's the money in the Money Alps ... you know the state of the Prophet Elias uppers default there is literally bookkeeping just ... people not turn to page ... I mean it did for decamping especially comes from banks is very important right but the end of the day of ... as we saw the case a Lehman Bros allies financial decision ... there's a lot of fun and games that goes on Brentwood bookkeeping and the end of the day you may not be getting good view of what's actually going on with the exact impact of the mark to market ... Goldman particular avoid playing time CEO ... you know was really vocal sort through and how ... does it matter to lot of what was going on and yesterday he now they said we that we are religious about this week mark things down a mark them up and that's the way everyone should do it in if everybody did back ... then everyone went on to do with a no financial crisis so ... you know I think I ... mean I get to really think she get nine eleven still to come down to the family I know you work and I import ...